gold prices experienced a decline on Tuesday after reaching record highs of $2,532 on Monday. This retreat comes amidst a pause in the recovery of the US Dollar and Treasury bond yields, all while market sentiment remains cautious. Despite the recent dip, the technical indicators suggest a favorable environment for gold enthusiasts, who are now looking for new catalysts to drive prices higher.
The gold market is currently consolidating above the $2,500 level as buyers anticipate potential triggers to break through recent resistance levels. As tensions in the Middle East appear to be easing, this has contributed to a decline in the safe-haven demand for gold . The US Dollar has halted its overnight recovery, following a significant rise in US Durable Goods Orders for July, which saw a surge of 9.9% compared to the expected 4.0% increase.
Market expectations are shifting regarding Federal Reserve interest rate cuts. The likelihood of a 50 basis point reduction in September is now estimated at 28%, while the chance of a 25 basis point cut has risen to 72%. This shift comes in response to encouraging US economic data, suggesting that the recovery of the US Dollar may continue, impacting gold prices.
Looking ahead, gold traders will be closely monitoring upcoming US consumer confidence and housing data, as well as remarks from Federal Reserve officials which may provide insights into future monetary policy. For now, bullish sentiment persists, supported by physical demand prospects from major markets like India and China. The price of gold seems poised for potential growth, particularly if it can surpass the recent highs and break through key resistance levels around $2,550, which would open the door to further increases. Conversely, critical support levels rest at $2,500, with additional concern if the price were to fall below $2,468, indicating a shift in momentum.
